William "Billy" T. Walters, 71, who in his prime had the financial muscle and acumen to move betting lines worldwide and scared Las Vegas sportsbooks and offshore gambling operators to the degree that they refused to take his bets, is laying low inside the Pensacola Federal Prison Camp, a minimum-security facility housed on a naval air station in the Florida Panhandle.

Walters is up at dawn and goes about his day in a Christmas green, prison-issued uniform. The sugar-white beaches gather waves just 15 miles away, but they're out of sight and mind. So, too, is Walters' pampered life of private jets, designer homes in places such as Cabo San Lucas, Mexico, and rounds of golf at plush courses. His business life outside of sports gambling -- playing the stock market and managing his car dealerships and commercial real estate ventures -- also has been neutered.

So Billy Walters waits. Waits on the U.S. Court of Appeals for the 2nd Circuit in Manhattan to hear an appeal this spring of his conviction in the insider trading case that sent him to federal prison for five years. Waits to see whether good behavior in prison will cut his sentence. And waits to learn whether the U.S. Supreme Court will do -- possibly as soon as next week -- what seemed unthinkable during his gambling career that stretched over four decades: decide whether to legalize sports gambling and thereby divvy up a market that could be worth as much as $5.8 billion in annual revenue.

"My whole passion, my whole life is about nothing but gambling," Walters said in an October interview at his Las Vegas golf club, just ahead of his reporting to prison. "That is what I wanted to do. ... I probably came in as a gambler, and I am going to go out as a gambler."

The morning of that interview, Walters sat behind his desk at the Bali Hai Golf Club he owns, oblivious to the NFL games that were soon to kick off. Even in prison and unable to gamble, he still might be able to make some money on the league: The soon-to-be Las Vegas Raiders had opened negotiations with his business representatives to convert the 7,000-yard Bali Hai course into stadium parking.

Before he entered federal prison, Walters spoke at length with Outside the Lines, eager to discuss the insider trading conviction and his life-changing trial. He lamented not testifying in his own defense. He groused about how his one-time friend and gambling partner, golfer Phil Mickelson, left him high and dry and might be most responsible for him being in prison. And he spoke about finding perspective in recent years and how he had prepared to contend with the loss of luxury, freedom and adrenalin-inducing challenges that defined him for decades. Once inside the prison, though, Walters and his team have become far more careful in recent months, not wanting to anger a court system that could set him free early, unwilling to draw publicity to himself or even risk affecting prison privileges such as leisure and library time. He corresponded briefly, though, about the pending Supreme Court decision, saying legalizing his livelihood would create revenue for states and create jobs.

Billy Walters, widely considered the most successful sports bettor in U.S. history, leaves a federal courthouse in 2016 after being indicted on insider trading charges. AP Photo/John Locher

THE MINIMUM-SECURITY camp Walters lives in is deemed one of the easiest places to serve a federal sentence. Most inmates are white-collar criminals in for less than 10 years. It is confinement, though: visitors only on weekends; lights out by 9:30 p.m.; lunch as simple as two hot dogs, coleslaw and a bag of chips.

Former NBA referee Tim Donaghy spent 11 months inside the Pensacola facility a decade ago after pleading guilty to participating in a gambling scandal conspiracy. He remembers the prison attire, the dozen inmates crammed into a room with six sets of bunk beds, afternoons in the weight room and evenings in the library, damp winter days and nights without heat, filling up on cans of tuna purchased from the commissary.

"Once you get into a routine, it's very relaxed," Donaghy said. "As long as you keep to yourself, you should not have too many problems."

Neither Walters, his attorney nor his wife would comment about how Walters has adjusted to prison life. They essentially refuse to tolerate questions about it.

Donaghy figured Walters hasn't had to worry about much; inmates are unlikely to be a concern: "They are going to worship him, because they are going to know he has money. They are going to do what they can to do favors for him."

Walters does indeed have money, having made hundreds of millions of dollars from the stock market, his auto dealerships, his real estate and his true wheelhouse, sports gambling.

Walters grew up poor in the hills of Munfordville, a rural Kentucky outpost between Louisville and Nashville. His father was a gambler and died before Walters' first birthday. His mother was a hard drinker who walked out on her son and two daughters. Young Billy was raised in a house with no running water or indoor plumbing by his grandmother, who died when he was 13. He was married at 17 and became a father at 18. He was $200,000 in debt not long after moving to Las Vegas in the early 1980s, but few people have out-hustled the fearless multimillionaire, one equally comfortable chatting up the hired help as he is boardroom tycoons.

Walters can be both kind and a bully, charming and scheming. He balanced his opulent lifestyle with lavish gifts to charity as well as to presidents, governors and city council members.

Walters is supremely confident, and he rarely operates without a plan. He had one going into prison.

"I know exactly how I exist in that environment," he said in a final pre-prison interview. "I am going to stay busy. Sports betting, that is over. That is another part of my life. Running these businesses, it is over. It is history. I am in there, and I have to have a different purpose, whether it is improving somebody else's life or I do a lot of reading. ...

"The biggest challenge I will have in there -- I have a very active mind. Sometimes I wish I could turn it off. I can't. The challenge I'll have in there is me making sure I am involved in something that is going to keep me mentally active and something I am going to be interested in."

PART OF WALTERS' plan is also to avenge his insider trading conviction.

Nearly a year ago, on April 7, a jury convicted Walters of 10 counts of conspiracy, securities fraud and wire fraud. Prosecutors said Walters illegally made $40 million by trading Dean Foods Co. stock from 2008 to 2015. Thomas Davis, former Dean Foods board chairman, testified that he told Walters about major Dean Foods developments before they became known publicly.

"I just lost the biggest bet of my life," Walters said minutes after the jury had returned its verdict. "To say I was surprised would be the biggest understatement of my life. Frankly, I'm in total shock."

The case dragged in Phil Mickelson, too. Prosecutors said Mickelson made nearly $1 million after Walters told him in 2012 to buy Dean Foods stock. Mickelson gave the profits to Walters to cover gambling debts he had owed him, prosecutors said. Though Mickelson never faced charges in the case, the Securities and Exchange Commission sued him over the stock trades, and Mickelson agreed to repay the money.

Walters recites a litany of reasons why he believes his conviction was unfair, from alleged FBI corruption to a slanted case against him to make up for all the other times over decades prosecutors had tried but failed to catch him doing something illegal.

But Walters also blames his former good friend and gambling partner, Lefty.

During the investigation, Mickelson twice told FBI agents he had no knowledge of insider trading involving Walters, but when it came time to show up in court, Mickelson stayed away. Mickelson's longtime attorney Glenn Cohen declined comment when reached by Outside the Lines.

Court filings show that Mickelson's attorneys had said if he were to be called to testify in Walters' trial, he would exercise his Fifth Amendment right against self-incrimination. Walters' camp, however, said prosecutors never attempted to compel Mickelson to testify to get at the truth, something they could have done by offering him immunity from prosecution.

"Here is a guy that all he had to do was come forward and tell the truth," Walters said in October, as he leaned forward in a chair behind his nearly 10-foot-wide office desk, its marble top home to three computer monitors. "That was all he had to do. The guy wouldn't do that because he was concerned about his image. He was concerned about his endorsements.

"My God, in the meantime a man's life is on the line. He's going to go to prison. And you got prosecutors up there during the entire trial, the entire month -- all they talked about over and over was me giving my friends insider information. That is all they talked about. And they knew those jurors were all up on the internet reading that stuff about Phil [profiting from the Dean Foods stock purchase]."

Mickelson still starred in the courtroom, even if he weren't there in person. He was mentioned by name at least 122 times during the three-week trial, the majority of mentions from prosecuting attorneys.

Both Walters' team and prosecutors agreed that, in the summer of 2012, at the height of the insider trading, the professional golfer owed a sports gambling debt to Walters of $1.95 million. Also stipulated was that Mickelson had accrued and repaid similar gambling debts in the past to Walters.

The government argued that Mickelson's text and phone communication with Walters in July 2012 was tied to Dean Foods information Walters had been hearing from Davis, the former board chairman. On July 30, Mickelson purchased 3,900 shares of Dean Foods in an account under his and his wife's name. He purchased another 240 shares in trust accounts for his then-minor children. A day later, Mickelson invested $2.4 million in an additional 196,100 shares.

Federal investigators found the trades were Mickelson's first Dean Foods stock purchases, though it was revealed that as early as 2008 Walters himself held four million shares of Dean Foods stock. Walters said he researched and knew the inner workings of the company as well as anyone, and by the summer of 2012 the stock was vastly undervalued and a "free roll" -- gambler's parlance for a wager with limited downside and a huge upside.

After a positive second quarter report and news in early August of a possible spinoff, the value of Dean Foods -- the nation's largest milk processor -- spiked almost 40 percent, $12.42 a share to $17.46. Federal investigators found Mickelson cashed a $930,000 profit the next day when he sold all his shares and those of his children. In this instance, Walters held off selling his shares for nearly a year, but the government claimed that over the course of the nearly seven-year insider trading plot he netted more than $43 million, both from purchasing stock but also by avoiding losses by selling Dean Foods shares after receiving helpful insight from Davis.

"Mickelson made just under a million dollars -- money that ultimately he transferred right back to the defendant because of a gambling debt," prosecutors told the jury. "Of course, Phil Mickelson could pay it back, but this was another way for Billy Walters to feed himself, by giving Mickelson this sure thing. Information that he knew was going to happen, he knew that the money would come back around, and that's exactly what it did."

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Walters' attorney, New York-based defense counsel Barry Berke acknowledged his client previously shared sports and stock tips with Mickelson. He scoffed, though, at the notion of Walters passing along inside information to his celebrated, now ex-friend.

"So, if you're Bill Walters -- and you believe that someone has given you illegal inside information, the last thing you would do is give it to Phil Mickelson, one of the most famous athletes in the world," Berke told jurors. "That is immediately going to track regulatory scrutiny and lead back to Bill Walters."

During the trial, prosecutors showed that Mickelson transferred nearly $2 million to cover his sports gambling debt to Walters on Sept. 19, 2012 -- a month after his big stock win in Dean Foods. Mickelson was spared criminal charges and an embarrassing court appearance, though the Securities and Exchange Commission later identified him as a "relief defendant" in a civil complaint and required repayment of $930,000 in trading profits and $105,000 in interest.

Mickelson's gambling past has been well-documented. For example, in 2016, Outside the Lines reported Mickelson's connection to an illegal offshore gambling operation. Federal court filings revealed an intermediary had acted as a conduit to pay a $2.7 million gambling debt Mickelson owed an offshore sportsbook.

Gregory Silveira, a California-based agent for the offshore site, subsequently pleaded guilty to money laundering charges and remains incarcerated at a federal prison camp in Arizona. Mickelson was not criminally charged, though the government kept the nearly $3 million that was being transferred to allegedly pay off the gambling debt.

Mickelson's camp describes him as a victim in the Walters insider trading case, though his personal attorney, Cohen, declined to say why. Phone calls were not returned by Washington, D.C.-based attorney Gregory Craig, former White House counsel to Presidents Bill Clinton and Barack Obama, who represented Mickelson during the federal investigations.

In Walters' mind, Mickelson held the key to his freedom, if he had just explained to jurors what had really happened.

"It was clear from the pleadings, the public documents during the trial, Mickelson was interviewed on more than one occasion [by FBI agents]," said Richard Wright, Walters' longtime personal attorney. "And he denied any wrongdoing on his behalf as well as Bill's behalf. Essentially denying he got any tips. He had denied that to the government. ...

"If he had testified, he would have denied he had any insider information from Bill Walters. In my judgment, it would have helped us. I can't say, 'Oh, that means we absolutely win or anything, but it would have made someone else's credibility an issue. And it just adds up."

From a legal perspective, Wright understands Mickelson being a courtroom no-show.

"Obviously if you look at it selfishly like any lawyer, if I can keep my client off of the stand that is the safest, most conservative approach that anyone can take," Wright said.

Walters' lawyers are expected to present oral arguments as early as May before a three-judge panel representing the U.S. Court of Appeals for the 2nd Circuit, seeking to overturn his conviction -- or, at the very least, allow for a new trial. The appeal alleges government misconduct, arguing that the trial judge did not allow an evidentiary hearing and that the key witness, Davis, perjured himself at trial, and the government knew it. A decision is possible before the end of the year.

Davis initially told investigators that he and Walters did nothing wrong, but after cutting a deal for a reduced prison sentence, Davis told a different story in court. He told of having provided Walters non-public information about Dean Foods over a lengthy period of time. He told of passing along such information as earnings projections, operating plans and specific company transactions. He told of being indebted to Walters for nearly $1 million in two loans. As he became more indebted, Davis added: "[Walters] became more demanding of information."

As part of his deal with the government, Davis pleaded guilty to 12 criminal counts, including securities and wire fraud, obstruction of justice and perjury. With Davis facing at least 10 years under federal sentencing guidelines, prosecutors recommended he not be imprisoned due to his cooperation, but the presiding judge sentenced the government's star witness to two years in prison, labeling Davis "a phony, fraud and a crook." Davis, who at one time enjoyed minority ownership in both the Texas Rangers and Dallas Stars, is serving time at a federal prison camp in Texas.

Davis helped the government finally get its man after decades of trying, yet not without a government black eye suffered by the FBI and Justice Department, both of whom have taken reputational hits of late. Federal documents show the case against Walters, which at the time focused on billionaire investor Carl Icahn and well-timed trading in Clorox stock, was dormant in 2013 when the lead FBI agent who had investigated the matter began leaking secret grand jury information to New York Times and Wall Street Journal reporters.

It was Walters' attorneys who raised the specter of the government leaking grand jury materials to the media, alleging the leaks were orchestrated to bring exposure to a case going nowhere. Details from the illegal leaks were published the year before Walters' grand jury indictment and included specifics on trades being examined and records being analyzed, the identity of those approached by the FBI as well as supposed targets of investigation.

Former U.S. Attorney for the Southern District of New York, Preet Bharara, initially denied the leaks ever took place, dismissing the allegation to the judge as "baseless." He described defense efforts to unmask the leaker as a "fishing expedition." Soon after, in December 2016, Bharara acknowledged the leaks as an "incontrovertible fact" and identified the source as David Chaves, an FBI white-collar crime specialist and supervising investigator on the Walters insider trading case.

At the time, Walters' attorneys argued unsuccessfully to have the case thrown out. Chaves eventually left the FBI and remains under criminal investigation by the FBI's Office of Professional Responsibility and the Justice Department's Office of the Inspector General. The government's leaking of information and subsequent reaction to it remains a significant part of Walters' appeal.

Bharara did not respond to messages left for him with the NYU School of Law, where he's currently an adjunct professor. Chaves' attorney, Sean P. Casey, declined comment. "Imagine the irony of this, an FBI agent leaks inside information to try and catch somebody leaking insider information," said Wright, Walters' Las Vegas-based attorney.

From the start, Walters and his camp butted heads with the government over what they perceived as grandstanding by Bharara, who declined Walters' offer to self-surrender when it became clear he was going to be charged with insider trading. Instead, a security staffer rushed into Walters' office late one morning in the spring of 2016, telling Walters about two armed, plainclothes law enforcement-types lurking about the Bali Hai clubhouse. Walters later strode into the clubhouse restaurant for lunch and eyed a woman, whom he perceived to be a federal agent, with a holstered gun. He alerted his attorney.

"My attorney calls the prosecutors in New York and says, 'Look, Mr. Walters has been trying to surrender himself for two months. You have people surveilling his business. Can he surrender himself?"' Walters recalled. "Well, they didn't mean to arrest me that day. They were running surveillance, and they were going to arrest me the following morning, real early. So, when he called them, they panicked, and they came down, and they arrested me."

But they didn't take him to jail right away.

Instead, with his attorney's consent, Walters spent the night with FBI agents at the J.W. Marriott in Summerlin, a casino-resort on the western outskirts of Las Vegas. He was arraigned the next day, though not before Bharara -- once dubbed the "Sheriff of Wall Street" -- held a media conference in New York. "Have you ever heard of a guy who got arrested, that they stuck in a hotel, so they could have a press conference?" Walters asked.

Prosecutors said Phil Mickelson made nearly $1 million after Walters told him in 2012 to buy Dean Foods stock. Mickelson gave the profits to Walters to cover gambling debts, they said. Mickelson never faced charges but paid a federal fine. Gregory Shamus/Getty Images

AS WALTERS CONTEMPLATES his fate in prison, the U.S. Supreme Court contemplates making his livelihood legal in the United States -- something once unthinkable.

From prison, Walters responded favorably to the possibility of legalization while emphasizing the need for uniform and proper regulation by individual states that get into the game. Based on personal experience, he said that state regulations should ensure customers will be treated equally -- sportsbooks should not be allowed to close the accounts or dramatically reduce the betting limits of successful players, as occurred with Walters in Las Vegas.

Walters wrote, through his attorney: "There are a number of benefits -- jobs, taxes, allowing Americans to engage in an activity that is already taking place legally [in Nevada and offshore sites]. License the people involved to keep out the criminal element."

In a 2015 ESPN The Magazine profile, Walters voiced frustration over what he said were draconian laws that drive a massive market of betting dollars to poorly regulated offshore locales.

"Everybody in this country bets on sports. If you were to take away the office pools, fantasy pools, people betting on sports, I guarantee the [TV] viewership would be cut in less than half."

Attorney Richard Wright said his client, Walters, had to set up an elaborate business to bet domestically and internationally.

"Basically, in Bill's gambling world, in order to do it all lawfully, he operated in Nevada legally with all of the books. And in order to operate in the rest of the world, he had to go completely to [Panama]. ... It was just like he was in Nevada and then he moved out to Panama and did the same thing from Panama, where he could bet in England, Australia, Ireland, everywhere."

Under a legalized system in the United States, his attorney said, Walters could have operated his gambling business far more cheaply and put his employees to work domestically. And Walters suggests with a potentially larger gambling market, he could wager greater sums and win even more money.

Walters in October at his Bali Hai Golf Club in Las Vegas, just ahead of reporting to the federal prison camp in Pensacola, Florida. Mike Fish/ESPN

AS BILLY WALTERS sat during his final pre-prison day in his Las Vegas office at his Bali Hai Golf Club in October, he still hadn't fully accepted all that went along with defeat. He could understand the government probing complicated, multimillion-dollar transactions, but not uncovering anything approaching a crime, in his mind.

So, he didn't see the verdict coming. He hadn't prepared his family. He hadn't prepared his employees. He was flu-ridden when he was convicted on all 10 counts last April, after four hours of jury deliberation. He headed to a home in California a beaten man.

"I would say for the next two days -- I am sitting there deathly sick," Walters said. "I have been in trial for 30 days. I'd been going to court every day, getting up early, staying late, and going through quite a bit of tension. I was in my office, in a recliner. I think for two days it was almost like those two days didn't happen. And then after that, I snapped out of it and realized what it was. I had to get up and go to fighting."

Ever the gambler, Walters fancies his current fate as just another game of chance.

"To me, I equate this to playing poker," Walters said. "I am in a nine-hand poker game, and I just played a pot and now they dealt the cards. I have a new hand. I have to take the set of facts and the circumstances I have today. I got to look at the potential outcomes of it. And I have to be realistic with it.

"OK, so I go to prison, I am going to make that the best possible situation I can make in the environment I am in for the time that I am there. That is what my life is going to be. It is just that simple. Because of my son and my interaction with the handicapped and mentally challenged people, I think I have a pretty good handle on things as far as perspective is concerned. I go over to Opportunity Village [Walters is a major benefactor of the Las Vegas-based nonprofit serving adults with intellectual disabilities] and see people there who through no fault of their own have been dealt the rottenness hand in life. They come over there every day. They work. They make no excuses. You ask them how they are doing, and I never heard a negative word out of one of them in 25 years.

"You look at something like that and what I got is a temporary situation. It is not a good situation. It is clearly something I never dreamed would happen. And what has happened and the way it happened is as bad as it gets, but I do have a perspective. This will end. I don't know when it will end, but it will end. My life will go on. And I don't have anything I can't recover from. So, from that point -- I been married 41 years. I got a great wife. In my trial, there were way over 100 people that sent letters in. So, we have a lot of friends. Frankly, I consider myself to be one of the most fortunate men in the world. I really do. Like I said, I got things in perspective."